It is a dramatic change in the price conscious Indian auto market where small cars have traditionally cornered the bulk of consumer demand. In 2015/16, the rate of growth of utility vehicles (UV) - including sports utility vehicle (SUV) and multi-purpose vehicle (MPV) segments - has started to gain, well above that of hatchbacks. Though hatchbacks still comprise around two-third of the passenger vehicle market, UVs - despite their higher cost and lower mileage - rose to 25.54 per cent in the first quarter of 2016/17, a significant rise in market share from 21 per cent in 2015/16. Five of the top 10 bestselling passenger car models of 2016/17 are UVs - Hyundai Creta, Toyota Innova Crysta and Maruti Vitara Brezza. The achievement is all the more impressive since auto sales have been tepid for a number of years.
UVs are distinguished by their larger size, higher ground clearance and four-wheel drive, as compared to hatchbacks. For years in India, they struggled to make an impact, with the Gypsy, for instance - the first ever SUV in the country, launched three decades ago by Maruti Suzuki - lagging well behind the company's more popular models like the 800 or the Omni. The contrast with the reception to its new SUV, the Vitara Brezza launched in January this year, is striking. "The Brezza is quite a craze," says R.C. Bhargava, Maruti Suzuki's Chairman. "It has a six-month waiting period. It has surpassed our expectations and could become our fastest growing model ever."
A number of Maruti Suzuki's rivals have also recently launched new SUV models - Hyundai has Creta, Mahindra has TUV300 and KUV100, Honda its BR-V, Toyota, a new version of its Innova as Crysta - all of which have been enthusiastically welcomed. Honda's BR-V has notched up 10,000 bookings since its launch in May this year. Many more are expected this year: Tata Motors' Nexon, Maruti Suzuki's Ignis, Mahindra's Ssangyong Tivoli, Datsun's GO-Cross and perhaps, Ford's Kuga. Hyundai's new Tucson - Europe's third-highest selling SUV after Nissan's Qashqai and Renault Kadjar - Chrysler's Jeep Wrangler and Jeep Cherokee are expected to follow. But success is not limited to new models - the likes of Mahindra's Scorpio and Tata Motors' Safari continue to have ardent customers.
Competition among the numerous brands is fierce. In March this year, Maruti's Brezza was the top-selling SUV with 7,193 units sold, but in April it had slipped to third place. In May, it was back at No 2, with Innova as the bestselling UV brand, selling 7,259 units, followed by Creta and Mahindra's two models. All of them are stepping up production, with Maruti increasing Brezza's rollout from 6,500 to 10,000 units a month to reduce the waiting period. "We're noticing unprecedented sales of our SUVs in Delhi, Mumbai and other major metros," says P.N. Shah, Mahindra CEO - Automative Sector. Rakesh Srivastava, Senior Vice President, Sales and Marketing, Hyundai, is just as enthusiastic about the Creta. "Despite increasing production, the demand exceeds supply," he says.
UVs can also be divided into segments - compact, mid-size, luxury - and it is no surprise that it is the compact variety that appeals most to the value conscious Indian consumer. A number of the recent SUV launches have been in the compact category. Renault already had a winner SUV in its Duster, but with its sales lately sagging, it also brought in its SUV-styled Kwid in September last year. While the Duster costs between costs between Rs 8.46 lakh and Rs 13.56 lakh, the Kwid's starting price, at Rs 2.62 lakh, matches that of any hatchback. "Duster helped us establish the Renault brand in India, so we thought we would use the same concept in the mini segment too," says Sumit Sawhney, Renault India Managing Director. "Kwid borrows the styling philosophy of Duster, such as wheels at the outer edges of the body, high ground clearance, wing extenders and versatility in use." It is also working towards introducing its global favourite among compact SUVs, the Kadjar, in India.
While young people in general have been attracted to SUVs, a curious feature is their growing attraction for women drivers. In 2015/16, around 6 to 8 per cent of SUV buyers were women. This may appear small, but in the overall passenger car market, woman buyers comprise half this figure. In the luxury SUV bracket, women buyers are around 12 per cent against a negligible number barely four to five years ago. The introduction of an automatic transmission variant in most SUVs - which dispenses with the need to operate a gear shaft - has been a further draw for them. "Automatic transmission brings in many women customers," says Srivastava of Hyundai. Creta, which always had an automatic transmission variant with its diesel engine, recently added one for its petrol model as well.
Some of the new SUVs like Vitara Brezza come only with diesel engines. Even among those with petrol and diesel variants, it is the latter that has proved more popular - 84 per cent of SUVs sold in the first three months of 2016/17, for instance, were diesel powered. "Around 80 per cent of Creta's demand is in diesel," says Srivastava of Hyundai. Diesel SUVs are preferred despite diesel's polluting potential and the curbs imposed on such vehicles by the Supreme Court. Last December, the court banned registration of new diesel vehicles of more than 2,000 cc in the National Capital Region - which included popular models such as Innova and Mercedes-Benz GLA.In opting increasingly for SUVs, Indians are only following the global pattern. The SUV segment was the biggest growth driver in Europe in the January-March quarter of 2016, gaining 25 per cent over the same quarter in 2015, with Hyundai's Tucson and Renault's Kadjar leading the way. Other models, too, are selling handsomely - Toyota's RAV4, for instance, gained 13 per cent globally and Honda's CR-V 7 per cent in 2016 (until June). "Across the world, SUVs continue to post strong growth at the expense of traditional segments," says Kaushik of Jato Dynamics. "It is the same in India with a clear trend of consumers moving from compact cars and sedans to small SUVs."
Safer Options
A big advantage of SUVs is that they are much safer, in the event of an accident, than hatchbacks or even sedans. Safety standards have risen over the years and all vehicles have excellent crash test ratings, but SUVs are several notches safer. Tests by agencies such as the New Car Assessment Programme (NCAP) have shown that in the case of a side-on or head-on collision, SUV occupants are less likely to be injured than those in smaller vehicles. One particular study by the University at Buffalo showed the possibility of casualties occurring - following a crash - is 7.6 times lower for an SUV passenger than for those in other types of vehicles. "The SUV is bigger and heavier with a higher stance, which allows superior construction," says Srivastava. "It enables carmakers to accommodate safety features like crumble zones, which also appeal to the safety-conscious younger generation."
There are no mandatory safety ratings for vehicles in India yet, though they are likely to be enforced by next year. Mahindra XUV500, for instance, got a high safety rating from NCAP-Australia, but it did not have to satisfy any such standard in India. In this case, then, carmakers seem to be ahead of the regulators in the country.
